COPPER TECHS: (H5) Trend Needle Points North

Previous bid-to-cover ratios: most recent first: 2.53x, 3.22x, 1.84x, 1.64x.

Note previous operations had GBP800mln size.

• Wednesday’s US CPI report headlines the weekly calendar, with Bloomberg consensus currently looking for a 0.2% M/M print for core CPI in what’s a close call with a 0.3% M/M.
• Indeed, our initial review of 13 unrounded analyst estimates sees these generally more detailed projections centered around 0.25% M/M for core CPI in December.
• That would be a moderation from the 0.31% M/M in November and four months oscillating between 0.28-0.31% M/M since August.
• Initial core PCE estimates meanwhile point to a softer outright print, averaging 0.21% M/M (initial range of 0.19-0.27), but directionally it's different as it would be an acceleration after a soft 0.115% M/M in Nov. Prior to that soft spot, core PCE had averaged 0.26% M/M in Sep-Oct.
• Tomorrow’s PPI report will no doubt impact core PCE tracking before a greater convergence in analyst estimates after CPI on Wednesday.
• There's a greater difference between unrounded estimates and the broader median when it comes to headline CPI tracking, however. Unrounded analyst estimates average 0.39% M/M, and whilst 20 of 48 Bloomberg estimates look for a 0.4% increase, 24 look for 0.3% and 4 look for just 0.2%, leaving an overall average of 0.33% M/M. 

Stabilisation away from session lows also evident in GBP STIRs as the day progresses, leaving 44bp of cuts priced through year-end and SONIA futures little changed to -4.5 on the day.

• UK headline flow limited since PM Starmer’s comments that underscored the government’s desire to stick to the fiscal rules and generate growth, while underscoring its willingness to make difficult spending decisions.
• We will hear from BoE’s Breeden again on Tuesday, but as is the case with most of her speeches, there is unlikely to be much on monpol.
• More focus will be placed on comments from dovish dissenter Taylor later in the week, as well as Wednesday’s CPI data.